Gazprom to set up Israeli unit - report

"Oil and Gas Eurasia" reports that Gazprom's Israeli subsidiary will focus on drilling as well as gas transmission from the country's offshore fields.

"Oil and Gas Eurasia" quotes Israeli officials as saying that Russian gas giant Gazprom JSC (RTS: GAZP; LSE: GAZD; DAX: GAZ) plans to set up an Israeli subsidiary that will help develop the country's offshore natural gas reserves, especially Leviathan. The remarks were made following the meeting between Russia's President Vladimir Putin and Prime Minister Benjamin Netanyahu last week.

The sources said that Gazprom's Israeli subsidiary will focus on drilling as well as gas transmission from the country's offshore fields, the sources said. Gazprom has already expressed an interest in exporting LNG from Israel. All future international tenders issued by Israel in the gas sector would be open to Gazprom and other Russian companies.

RELATED ARTICLES

Previous reports said that Israeli officials had reservations about bringing Gazprom into the Israeli natural gas industry, partly due to concerns that it would try to block the sale of Israeli gas in Europe, Gazprom's primary market. Israel is also worried about Gazprom's immense political power, given that the company's executives are former top government officials.

"Oil and Gas Eurasia" quotes Rosneft CEO Igor Sechin as saying at a press conference that the company was looking at possible participation in the development of Israel's offshore gas fields, but that it had not received any "effective offers".

The paper adds that senior Gazprom officials have visited Israel a few times in recent months to discuss cooperation. In February, a delegation headed by Frederic Barnaud, director of Gazprom's LNG division, held talks with Noble Energy Inc. (NYSE: NBL) and Delek Group Ltd. (TASE: DLEKG), partners in the Tamar and Leviathan fields, on possible cooperation.

Sechin is considered a close associate of Putin, and played a key role in the government takeover of energy companies from oligarchs.

In March, the Tamar partners held talks with Gazprom Marketing & Trading Ltd. for the sale of 2-3 million tons (2.8-3.2 billion cubic meters (BCM) of gas).

For the sake of comparison, Gazprom, in which the Russian government owns 50.1%, produced 550 BCM of gas in 2008, but has little experience in LNG exports. The company's profit in 2011 was $40 billion.